VENEZUELA - Petrochemical Sector.

A priority for the current regime, the petrochemical sector in Venezuela has failed to grow as planned. Major projects, including one at Jose which was to be the largest olefins plant in South America, have remained suspended since populist President Hugo Chavez took office in early 1999.

Under a programme unveiled in June 1999 and revised in 2000, the country's production of petrochemicals and chemicals, including fertilisers, should rise from 8.8 million tons/year in 1999 to 21 million t/y by 2010, with an investment of $10 bn. In his inauguration speech on Feb. 2, 1999, Chavez made this promise: "When I hand over this government, Venezuela should have a powerful chemical and petrochemical industry".

Chavez has opened the gas and petrochemical sectors to participation by foreign firms and Venezuelan investors. But both the local and foreign companies have shied away, partly because of the president's negative position towards free market reforms and partly in view of a downturn in the petrochemicals business.

In February 2000 Chevron backed out of a $1.5 bn petrochemical joint venture with PdV Chemicals, a unit of PDVSA. Chevron then said adverse economic conditions were the main reason. ExxonMobil is yet to finalise a joint venture with PdV Chemicals to have a $2.65 bn olefins plant built at the Jose industrial centre (see below).

In the massive restructuring of the hydrocarbon sector completed by early 1998, PDVSA became a holding company. Under this group, operating units now include PdV Oil & Gas (controlling PdV E&P, PdV Gas, PdV M&M and PdV Services), and PdV Chemicals. Under PdV Chemicals come Petroquemica de Venezuela (Pequiven) which is in charge of the petrochemical sector, and Pequiven's downstream units which are in charge of a variety of chemical production streams.